June 26, 2020

Tariff Exclusions for Pandemic-Treating Goods Not Likely, Lighthizer Says

The Trump administration does not appear likely to grant tariff exclusions for imports of goods needed to fight the COVID-19 pandemic, according to remarks by U.S. Trade Representative Robert Lighthizer at recent congressional hearings.

House Ways and Means Committee Ranking Member Kevin Brady, R-Texas, said Congress and the White House should work together to create incentives for companies to develop and manufacture such products in the U.S. but that in the meantime duties for medical products should be suspended if there is no domestic opposition. Senate Finance Committee Chairman Charles Grassley, R-Iowa, said there should not be “any unnecessary taxes on goods key to the [economic] recovery or in fighting the pandemic” and that “we’ve got to find a smart solution that accepts the reality that trade is fundamental to our survival and prosperity.”

But Lighthizer said he is “not in favor of reducing tariffs on the things we need” to fight the pandemic but instead would “be far more in favor of increasing tariffs on the things that we need as part of an overall plan to make sure that the next time we have domestic manufacturing capability in these areas.” This effort is “going to require a combination of a lot of things,” he said, “but also I think it requires tariffs.” As a result, he rejected the idea of waiving MFN tariffs on such goods, which he indicated are helping “U.S. companies who are now getting into this business.” He also said that the administration will consider extending exclusions from the China Section 301 tariffs for medical products “depending on what the need is” but will “probably not” grant extensions that would not have been granted otherwise just because the affected goods are needed to fight the pandemic. Companies have had “a year or two years to make a change” in sourcing these products, Lighthizer said, and therefore “should have made the change.”

(Source: Sandler, Travis & Rosenberg Trade Report)